Nature of the Case
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Facts
P is a country music entertainer aka 'Conway Twitty.' Since 1964, P has used a logo in connection with his work as an entertainer and in connection with his stage name. The insignia consists of an image of a small yellow bird (i.e., the Twitty Bird) strumming a guitar. P started his career in the mid-1950s, and by 1968, P was firmly rooted in the country music entertainment field. For the 10-year period from January 1968 through December 1977, every title released became a Number 1 hit. By mid-1970, considering all popularity charts together, Conway Twitty had earned 43 Number 1 positions for his recordings. P also had the largest fan club of any country music entertainer (i.e., over 10,000 members). P signed a contract to make records for MCA Records. In 1968, P and several of his friends decided to form a restaurant business. In late 1968, Twitty Burger, Inc. was formed to operate and sell franchises for the operation of Twitty Burger Fast Food Restaurants. Friends, acquaintances, and business associates were solicited to invest in Twitty Burger. In late 1968 and early 1969, approximately 75 of P's friends and business associates invested money in Twitty Burger. P intended to take the venture public but things got all screwed up. It was decided that the venture should be shut down. The last Twitty Burger restaurant was closed in May 1971 except for one franchise. P decided that the investors should be paid the amount of money that they had invested in Twitty Burger. P decided that he would repay the investors from his future earnings. P deducted these total amounts, $92,892.46 and $3,600, respectively, as bad debts or alternatively, as ordinary and necessary business expenses under section 162. Of course, this infuriated D. D determined that these total amounts were nondeductible personal expenses.
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